Introduction to Global Tantalum Material Consumption:
In CY 2013 Paumanok Publications, Inc. estimates that approximately four million pounds (avoirdupois weight) of tantalum materials will be consumed in the global market, a low point in both the supply and demand for this unique and important metal. At the point of sale, more than half of the tantalite is converted into engineered powder, while the majority of the remainder is sold as metallurgical products and a small amount is consumed in fine chemicals for laboratory and special industrial usage (according to Paumanok estimates).
Competition Among Industries for Tantalum Metal:
Competition for tantalum by industry can be intense because of its narrow supply chain, of the four million pounds consumed in 2013, about 50% of demand will be dictated by the electronics industry; primarily in the form of anode for capacitor and in the form of semiconductor targets which are sputtered to form a diffusion layer for use in the semiconductor manufacturing process. The remaining 50% of tantalum demand comes from industries that are niche and fragmented but collectively quite significant; and include alloy additives, industrial processing, cemented carbides, fine chemicals and some additional specialty product lines.
The Challenging Supply Chain:
Over the past 36 months, key hard and soft rock mining operations for tantalite have been either idled or permanently closed in Australia, Canada, Mozambique and Ethiopia; leaving the majority of demand to be satisfied by artisanal sources in South America and Central Africa; from recycled metal or from existing stockpiles throughout the supply chain. This scenario creates a balanced supply chain, only in weak economic conditions, however, any sudden upturn in the global economy, an upturn impacting both the professional electronics markets and the metallurgical end-use segments, would place a strain on the supply chain, and upset the delicate supply/demand balance currently in place. Any supply chain disruption resulting from an increase in demand from an improving global economy would create competition for tantalum among the following end-use market segments-
Tantalum in Electronics:
A more granular look at tantalum consumption in electronics reveals that capacitors and semiconductors are the most important market drivers; but additional minor markets, such as surface acoustical wave filters and thin film resistors also consume tantalum raw materials. It is also important to note that demand from the electronics industry has averaged from 50% to 70% of total tantalum demand over the past 20 years.
Tantalum in Alloy Additives:
Tantalum is also used in alloy additives, primarily because of its ability to make lightweight metals in demanding environments more structurally sound with the primary use being aerospace alloys, primarily as an additive for nickel based super alloys used in aircraft turbine blades, a market which continues to outperform in the commercial sector. Minor applications for tantalum metal include industrial turbine blades for gas generators and medical applications, including prosthetic limb implants.
Tantalum in Industrial Processing:
Tantalum is also consumed in the industrial processing industry whereby the tantalum is needed for its high heat handling ability and its corrosion resistance attributes. This includes the important market of chemical and pharmaceutical processing where condensers, crucibles, trays, containers and thermocouples are lined with tantalum; followed by the industrial market, where tantalum liners are used in industrial furnaces, many of which, ironically, are sold for the sintering of tantalum capacitor anodes. Also included here is tantalum consumption in the glass and specialty processing industries, which also required crucibles, trays, containers and thermocouples lined with tantalum.
Tantalum in Cemented Carbides and Other Industries:
Tantalum is also consumed in a myriad of additional industries. The most important and separate is the cemented carbide business, where tantalum is used as a grain inhibitor in professional cutting tools whereby the tantalum aids in controlling the microstructure and morphology of the carbide insert or wear part during sintering. Tantalum is also consumed in laboratory fine chemicals including oxides, fluorides and myriad of other chemical compounds used for optical coatings and for laboratory testing and experimentation.
Competing Technologies for Tantalum in Electronics:
In each industry where tantalum competes, there are alternatives to the metal, however, the primary reason why industries use tantalum is because of its known reliability. The metal has been in continuous use for decades in multiple industries and its performance and behavior is well documented.
Alternative Capacitor Technologies:
As we have established, the electronics industry can account for between 50% and 70% of tantalum raw material consumption and is the true variable that impacts global demand for the metal over time. In electronics, tantalum capacitor substitutes, include the ubiquitous and mass produced high capacitance multilayered ceramic chip capacitor (MLCC); the conductive polymer, molded chip aluminum electrolytic capacitor (solid polymer aluminum), and the niobium oxide molded chip capacitor (NbO capacitor). All three of these alternative capacitor products have targeted tantalum capacitor displacement as a primary strategy of going to market, and the vendors who produce these alternative dielectrics prey upon the shortcomings of the tantalum supply chain in order to propel their product forward through the market.
In capacitors, tantalum offers the electronic design engineer the highest capacitance in the smallest form factor, so if you want high capacitance from 100 to 1000 microfarad and volumetric efficiency is of paramount concern, you generally will chose the tantalum capacitor, and this becomes more so if the application is professional or mission critical where component longevity and known reliability is an important issue. The disadvantage of using tantalum is its challenging supply chain and the high costs associated with its production.
To date, the primary alternative product to tantalum capacitors is the high capacitance MLCC. This is a real threat to tantalum and should not be underestimated. In fact, developments in the high capacitance MLCC market continue to astound and amaze, and it has become the dielectric of choice for competing against tantalum chips especially for applications between 1 and 100 microfarad. MLCC also have an extremely low cost structure and a very stable supply chain. It is my opinion, that the tantalum capacitor supply chain has become so myopic and internally focused on its precarious supply chain that it in fact misses the fact that the high capacitance MLCC is the true threat to its long-term survival as a viable high capacitance dielectric.
The solid polymer aluminum chip capacitor is also of great interest and a threat to the larger case size tantalum chips, because it offers high capacitance in a small form factor just like tantalum and offers the customer a product with an abundant and stable supply chain (bauxite or aluminum); however the disadvantage is that the product line is limited and the capacity to produce these products is also limited and the same exact advantages and disadvantages of solid polymer aluminum are evident in the NbO capacitors as well.
Alternative Thin Film Technologies:
In targets, tantalum is used as a thin film diffusion layer during the semiconductor manufacturing process, and there are alternative targets that can be used here such as Tungsten, Molybdenum and Titanium, with the only disadvantage for tantalum being its challenging supply chain; however its advantage, according to primary sources in the semiconductor industry is its known reliability which is a critical factor in such an advanced process. Tantalum also offers high thermal and electrical stability with copper, good adhesion to silicon, few grain boundaries, high bonding strength and uniform grain thickness, which in summary means the engineer knows how the material will apply itself when its sputtered.
Future Outlook for Tantalum in Electronics:
Due to the high percentage of tantalum materials consumed globally in capacitor anodes, the future health of the tantalum supply chain is largely dependent upon the ability of the tantalum capacitor to move its technology forward. A detailed look at the structure of primary and secondary raw material supply to the end-markets which consume tantalum, in both electronics and metallurgical products, makes the researcher realize that the entire supply chain is dependent upon the mutual success of its various segments- that the sum of its parts is truly responsible for the long-term success of the whole. This is why the continued success of the tantalum capacitor, being the largest tantalum material consumer, is so important in the coming years.
The Focus on Tantalum as Capacitor Anode:
The largest market for tantalum materials has been the capacitor anode. This has not changed for the past 25 years, and will most certainly remain that way for many years to come, otherwise we fear that the entire market for tantalum would be threatened, including the materials sold for metallurgical purposes.
Continued Investment in The Tantalum Capacitor Industry
One benefit of tantalum capacitors that will continue to support its future consumption as a capacitor dielectric material is that the supply chain continues to invest in product innovation and in enhancing the molded chip offering in tune with the needs of the customer base. For example, when we look at an A case tantalum chip and its maximum capacitance value, we see that it has grown from 33 microfarads in 2003, to 100 microfarads in 2013. This increase in the capacitance value of an A case molded chip tantalum capacitor can be directly traced to an increase in the capacitance value per gram of capacitance grade tantalum powder, which is demonstrated by growth in the top end of the capacitance value per gram of tantalum metal powder spectrum; with a forecast for 2020 showing an increase in consumption of powders with CV/g values in excess of 200,000. In theory, this process will result in a 220 microfarad A case tantalum chip capacitor being developed over the next decade. This continued investment in engineered materials technology will ensure continued usage of tantalum in the evolving high-tech economy.
Summary and Conclusions:
Electronics are the primary market driver for tantalum and we expect its continued use in both capacitor anode and as a diffusion layer in semiconductor manufacturing. Tantalum capacitors, the major driver for tantalum materials, will continue to be needed in the high tech economy especially in mission critical circuits where known reliability and volumetric efficiency are key criteria in component selection. And this will be supported by decades of data that supports its performance as a capacitor in a circuit. Also, the niche that tantalum occupies in the 100 to 1000 microfarad range is formidable, and advances in tantalum powder technology will extend the available capacitance range deeper into the electrolytic range, while pushing the envelope on capacitance within each individual molded chip case size. Tantalum will remain a cyclical business and understanding that can help individual companies within industries plan for and profit from the changes in the market over time.
Statements of fact and or opinions expressed in MarketEYE by its contributors are the responsibility of the authors alone and do not imply an opinion of the officers or the representatives of TTI, Inc.
Dennis M. Zogbi
Dennis M. Zogbi is the author of more than 260 market research reports on the worldwide electronic components industry. Specializing in capacitors, resistors, inductors and circuit protection component markets, technologies and opportunities; electronic materials including tantalum, ceramics, aluminum, plastics; palladium, ruthenium, nickel, copper, barium, titanium, activated carbon, and conductive polymers. Zogbi produces off-the-shelf market research reports through his wholly owned company, Paumanok Publications, Inc, as well as single client consulting, on-site presentations, due diligence for mergers and acquisitions, and he is the majority owner of Passive Component Industry Magazine LLC.